Brits pay £7.9bn too much in tax
Friday, 02 Mar 2007 11:51
Brits paying each £160 in unnecessary tax
The average Briton is paying £160 in easily avoidable tax each year, 68 per cent higher than in 2002.
That is according to new figures from financial advice group Unbiased.co.uk, which show the UK is wasting £7.9 billion in pointless tax payments collectively.
"It's hard to say whether we are disengaged or just confused as to why people across the UK are still throwing away billions in tax every year," said Unbiased chief executive David Elms.
"Simple steps such as filling out a self assessment form correctly, making a will and taking full advantage of your tax credits, could help the UK pocket this wasted cash."
And despite 27 million UK adults resenting the rising tax burden, three people in four do nothing to reduce their tax liability, figures from Unbiased show.
"In Franklin's words, nothing is certain in life except death and taxes. . . But why pay more than you need to?" Mr Elms asked.
"People need to realise there are simple things they can do themselves to save on tax bills and that for more complicated areas, seeking professional help is easy."
Ten basic ways to claw back tax:
If you have assets over £285,000: Plan your inheritance - an extra £1.5 billion could go to chosen heirs by planning properly to avoid inheritance tax liabilities. Inheritance tax is often lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.
If you save: Use up your annual ISA allowance - £382 million in tax could be avoided by sheltering investments in ISAs, or moving savings from an ordinary deposit or savings account to an ISA. Also consider a friendly society savings account or products from National Savings & Investments as tax-efficient savings options.
If you are eligible: Claim your tax credits - £2.3 billion of 'free money' is up for grabs from HMRC and the DWP, in the form of pension credits, child tax credits and working family tax credits.
If you fill in a tax return: Sort out your self assessment - £463 million waste could be wiped out by all forms arriving present and correct by the January 31st deadline. Self-assessment forms received after the deadline incur penalties of £100; further penalties and errors make up the balance of tax wasted in this way.
All taxpayers: Maximise your personal tax allowances - £546 million goes begging each year, £322 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further £224 million by taxpayers not transferring savings accounts to non-taxpaying spouses, if appropriate, so that the tax liability on the savings is lower, or none.
If you save for your retirement: Top up your pension pot - £739 million could be spared by optimising contributions to personal or company pension schemes, or making additional voluntary contributions.
If your employer offers an employee share plan: Take advantage of it - £171 million is up for grabs for the estimated 600,000 staff currently in profit related pay schemes.
If you have capital gains: Use your allowance efficiently, perhaps by transferring assets between spouses to make the most of both of your capital gains tax allowances - £510 million could be saved in this way.
If you give to charity: £1 billion more could go to good causes by using tax-efficient means of charitable giving, i.e. using a deed of covenant, gift aid or payroll giving.
If your child or grandchild is eligible for a child trust fund: Avoid waste by using up the tax free saving potential - £125 million in tax could be saved in their first year of existence.